0:05

reality radio for a really

0:07

great future. We're talking real

0:09

money. Hello everybody. Welcome to

0:11

the show. I'm Don McDonald.

0:13

This is talking real money

0:15

and with me as always

0:18

most weeks. And

0:20

less, of course, he takes off early for a soccer

0:22

game or something. It's Tom cock, uh,

0:26

in the, uh, in the Bellevue studio, he knows

0:28

if you're going to tell me something, I'm going

0:30

to tell our listeners. I know I got

0:33

to be more careful. I should just

0:35

exit and not say anything. Hey, I'm

0:37

all about sharing because they went to

0:39

all the trouble to listen in.

0:41

So we might as well let them

0:43

know everything that's going on. I've

0:45

got my hand up. Is it okay if I leave early today?

0:47

Yeah. Uh, can

0:49

I have a hot glass? I

0:53

want to leave early today. I don't want to

0:55

talk about today's topics because I'm

0:57

kind of bored. I had soccer is more

0:59

fun. Hey everybody, but you can

1:01

call and keep me company later when he's

1:03

gone at eight, five, five, nine, three, five

1:06

talk, or keep us both company right about

1:08

now. Eight, five, five, nine,

1:10

three, five, eight, two, five, five. It's

1:12

really easy. It's really

1:14

free. And it's really about

1:16

the things that are important to you, not

1:18

the topics that we pick, which

1:20

we do. We do. We pick topics. That's

1:23

kind of how we start out every show.

1:26

But the direction we end up taking is well

1:29

determined by you really eight, five, five,

1:31

nine, three, five, talk, call every Saturday

1:34

from noon to two Pacific three to five

1:36

Eastern. So easy. Now

1:39

today, your Tom sends

1:41

me a list

1:43

of topics that we've discussed vaguely.

1:47

And I'm a little confused because I remember

1:49

what you sent me or what we talked

1:51

about earlier, but your

1:54

title became all about selfishness.

1:57

You're the title is with investing. It's

2:00

all about you. You

2:03

like that? No, you didn't like that. No,

2:06

I'm intrigued. I'm going to say

2:08

I'm intrigued. Here, why? Are we

2:10

going to talk about selfish investing?

2:12

Is that where we go? Kind

2:14

of, because isn't it kind

2:16

of selfish? I mean, it is about you,

2:19

right? I mean, it is about returns you

2:21

need and volatility, all that stuff. Okay, so

2:23

from that respect, it's not like it's just

2:25

about me and the heck with the rest

2:27

of you. You get all the money and

2:29

you get nothing. It's confusing right

2:32

now. I mean, because it's

2:34

always confusing. But it's more

2:36

confusing today because this

2:38

article points out that I

2:40

love when they throw all these numbers. Only

2:42

13% of the time since 1960, there's

2:45

two numbers, has the economy

2:47

expanded faster than There's

2:50

three numbers. While cash returns were

2:53

above bond returns and yields in the fixed

2:55

income market, we're still about 4%. You

2:58

get all that? Okay, I got it. I

3:01

got it. Okay, so what they're saying is

3:03

that with high economic

3:05

growth, high

3:08

short-term rates versus longer-term

3:10

rates, that

3:13

we're in an aberrant period. Yeah,

3:15

okay. Wow, that's nice. That

3:18

concludes today's show. I appreciate you listening. All

3:20

right. So how is that

3:22

all about us though? Well, because here's

3:24

the thing. I mean, because it leads

3:26

to confusion. Right now, people call us

3:28

all the time and say, why

3:31

do I want to invest in stocks because I can

3:33

make 5% in money

3:36

market, high-yield whatever, right?

3:38

Right. CD in some cases, I guess.

3:41

Why do I want to invest in anything

3:44

but cash, especially when it comes to the fixed

3:46

income part of my portfolio? Because it's paying more

3:48

than bonds. Safe bonds, I mean,

3:50

relatively short and intermediate-term bonds are paying what, 4%,

3:53

right? And

3:55

I certainly don't want to put my money

3:57

into those risky stocks because they look

4:00

really scary sometimes they go down right and then

4:02

they that I don't think they're ever coming back

4:05

so it's a very confusing time it feels

4:07

like whoa so what do I do with

4:10

my money then how do I decide where

4:12

it does go that kind

4:14

of thing okay I'm I'm just and

4:16

they quote totally interesting other numbers yeah

4:20

for example regarding equities had

4:23

you bought a thousand dollars worth of

4:25

stocks according to this article at the

4:27

2007 market top right the very tip top

4:29

I think it was late fall 2007 right

4:31

before it dropped about 50% well

4:34

yeah a year later the thousand is

4:36

six hundred thirty seven dollars and

4:39

then you're gonna laugh at this not

4:42

that you're not laughing already I'm laughing now

4:44

just quietly buying a

4:46

10-year Treasury for a thousand dollars in the final

4:48

quarter of 2017 seems

4:50

like data mining left

4:53

them with only nine hundred sixty nine dollars by

4:55

the end of 2022 now that might sound like

4:57

a lot but that's only a thirty dollar decrease

4:59

in five years but in other words you didn't

5:01

make any money in fixed income in

5:04

that time right the value that's a point

5:06

that's the point no there are I'm with

5:09

you on data mining yeah that seems very

5:11

but we'll talk about I think the lessons

5:13

for people here in a minute yeah because

5:16

work because I'm really kind

5:18

of lost it about

5:21

the significance of these numbers

5:23

yeah sometimes things go down

5:25

stocks generally more than bonds

5:28

give us a call 855-935-8255 in

5:38

medicine a second opinion might save

5:40

your life with investing a

5:43

second opinion might save your future

5:45

the trick is getting one without a

5:48

high-pressure sales pitch well I'm

5:50

Don McDonald and if you've been listening

5:52

to talking real money you know that

5:54

our goal is to help everyone create

5:56

a brighter future by investing and managing

5:58

money better that's why in addition to

6:00

helping everyone on our show and podcast, we

6:02

are also committed to making our 100% fiduciary

6:06

advisors at Apella available to help

6:08

everyone make the best financial decisions

6:10

based on science. So if you're

6:12

being pitched a financial product or

6:14

a system, make sure you get

6:16

a second opinion with no cost,

6:19

no obligation, and no annoying sales

6:21

pitch by going to talkingrealmoney.com or

6:23

call 800-386-3004. That's 800-386-3004 for talkingrealmoney.com.

6:44

Now, now we have the

6:46

truth. Now we know the truth. We

6:48

know why Tom wants to leave today's

6:50

show a little early. It's

6:52

a beautiful day in the Seattle area. Sit

6:55

on my deck and read, man. I'll tell you

6:57

what. It's one of those days. Wow. See,

6:59

in Florida, it's a beautiful day every time,

7:01

every day except the summer. Yeah.

7:04

You got bad times coming. And it's miserable. And that's why

7:06

I'm leaving. That's why I'm leaving. Oh,

7:08

oh, oh, we've got a little, I've got a

7:10

little question I want to ask all of you

7:12

in the country a little later on. So stick

7:15

around for that. About the trip? About the trip. Okay.

7:18

Anyway, we have a phone number you can

7:20

use. It's called 855-935-TALK. Well, that's not what

7:22

it's called. That's what it is. That's the

7:24

number you use. That's

7:26

its name, too. That's why we call

7:29

it that. We call it 855-935-TALK. And

7:32

we've got lines open for all

7:34

of you out enjoying the

7:37

weather in Seattle to call us.

7:39

Now, we have a number of

7:41

disparate facts that Thomas shared with us. We

7:45

have unusually high economic growth in

7:47

the United States. We

7:50

have unusually high short-term interest rates.

7:53

Then, for some reason, he

7:55

also shared with us the fact that if you bought stocks in

7:58

2007, You

8:00

lost money by the end of 2008. Well,

8:03

we were all shocked by that. And

8:06

if you bought bonds for some reason in 2017, you

8:10

lost a little bit of money by 2023, four now? 2020,

8:14

the end of 2022. It does

8:16

sound a bit like data mining. So what do

8:18

all these things have in common? What ties these

8:21

together? Well,

8:23

ties them together is that right now, people

8:25

are very confused if they come into money

8:28

kind of where to put it. I mean,

8:30

there's still $18 trillion in banks. There's

8:34

$6 trillion in money market funds,

8:36

which has seen a huge inflow in

8:38

the last few months. There,

8:40

of course, is a lot of money in

8:43

stocks because people still think stocks will make

8:45

you more money over the long haul, which

8:48

they have. But the reason

8:50

I bring this up is because all

8:52

of this, it turns into a difficult

8:55

time for people to figure out how to

8:57

invest. And the reason I say that's all

8:59

about you is, first of all, for me,

9:02

short-term money, I don't care what it's

9:05

paying. That's still short-term money. In other

9:07

words, I would not take

9:09

a bunch of my money and say, I'm going to put it into

9:11

a money market or a CD

9:14

or a similar instrument if

9:18

it's money that's for the long haul. Now,

9:20

it's going to feel great right now because

9:22

the money market, I think, at Charles Schwab,

9:24

for example, is paying 5.2%. And

9:27

you're going to say, well, where else am I getting a guaranteed 5.2%?

9:31

A few places, but it's hard to find, right?

9:36

So it leads to people being confused. But

9:38

to me, short-term money is for

9:40

things like those sort of cash instruments. It should

9:42

not be invested for, I'd say,

9:45

anything longer than three to five

9:47

years for sure. I mean, this is money that

9:49

you're set aside when you're going to have a

9:52

purchase, pay for college, do something like that. It's

9:54

got a purpose that's going to be short-term. I

9:57

think that is undoubtedly very important.

10:00

What you're saying, I think, in all of

10:02

this, the message

10:04

remains the same. The song

10:06

remains the same, as Led

10:09

Zeppelin sang, that your

10:11

short-term money should be in short-term

10:13

stuff. Your long-term money shouldn't be

10:16

in short-term stuff. Your long-term money should be

10:18

in long-term stuff in

10:20

which you take more risk. People get very confused because

10:22

it just seems so easy to make 5%, although I

10:24

did have someone correctly point out the other day, I'm

10:26

making 5% right now. Right.

10:29

Right now. Correct. That

10:31

could change very quickly. Right. It

10:34

could change tomorrow. Yeah. Well,

10:37

maybe Monday, but I mean

10:39

soon. Yeah, you're right. Not Sunday. Okay.

10:42

But here's the other thing. Nobody knows what day this is if it's a podcast. That's

10:44

a good point. And here's the other thing that people

10:46

get confused about and really do not pay attention to because

10:49

it just goes counter to human behavior

10:51

to think more than 3, 5,

10:53

10 years down the road. Most

10:56

people look at the current situation. They see those rates and they

10:58

say, I really want to do that, but they have no

11:00

idea what rate of return they need on their money

11:02

to either create the

11:04

wealth they need or to maintain

11:07

what they've got. So it comes

11:09

back to that overarching concern,

11:12

that overarching lesson that we try

11:14

to share. You need to know

11:16

what you need. You need

11:18

to know what you can stand. And

11:21

you need to know what you need to

11:23

do to do those things. Exactly.

11:25

Most people just don't look at it that

11:27

way. Instead of just looking at the number,

11:30

they look at the number. Now, you gave out

11:32

some numbers. I just want to come back to

11:34

something because I just heard- Oh, you're going to call me out on

11:36

these? These aren't my numbers, finally. No, no, no, no, no, no, no,

11:38

no, no, no, no, no, no, no, no, no, no, no, no, no,

11:40

no, no, no, no, no, no, no, no. I want to do this.

11:44

You mentioned how much money in

11:46

the US in cash and- Well,

11:50

in banks, it's like $18 trillion. $18 trillion in

11:52

the banks. It's 0.1. Yeah. And

11:54

the money market is somewhere around $6.5 trillion. And

11:58

globally, I looked it up globally. stocks,

12:02

there's $112 trillion. Wow.

12:05

Okay. That's $112 trillion. That's

12:09

$112 billion. billion

12:16

dollars. The reason I was

12:18

thinking about that because we spend an inordinate

12:20

amount of time in both

12:22

here as which we shouldn't spend

12:25

that much time on and across

12:27

the news media, the financial news media

12:29

talking about an asset class

12:34

loosely defined called

12:36

Bitcoin or cryptocurrency. Oh, we're

12:38

just going to come back to crypto. I

12:40

want to, but because I just looked it

12:42

up, even with the big run in crypto

12:44

right now, isn't that 1 trillion or something?

12:46

It's $1.3 trillion. Still

12:50

relatively small number. Yeah.

12:52

It's a thousand. I mean, I

12:55

know. This is, but it's

12:57

sexy. It's new, it's cool, and it's

12:59

the next big thing, man. I

13:02

know. Anyway. All right.

13:04

Okay. And you are none

13:06

of the above. No, I never claimed to be any

13:08

of those things. Me either. Nor will I ever be.

13:11

You finished the, you stole my thunder a little

13:13

bit because I was trying to say short term

13:15

money, short term money. Long term rate

13:17

of return is what you need to know. And

13:19

then knowing yourself, that's where this all

13:21

came from. If you

13:24

know yourself around volatility, around risk, you're

13:26

going to be so much more successful

13:28

than about 95% of

13:30

investors who see something happening

13:32

and respond to it. Because

13:34

if you know you can't take the heat of,

13:37

what did they say? A thousand dollars going to

13:39

637. You

13:41

should not be in an all equity portfolio. And

13:44

some equity portfolios, some indexes even did

13:47

worse than that. Yes, they did. So

13:49

it depends on how you define your

13:51

all equity portfolio. So then

13:53

the, okay. Here's

13:57

what's, here's the problem. This is the problem. Most

14:01

people blanch at the idea

14:03

of even considering starting

14:06

a planning process. It

14:09

sounds insurmountable, complicated,

14:13

mind-numbing, and

14:16

very constraining, constricting.

14:19

So how do you suggest

14:23

folks with, you know, $100,000, $10,000, $1,000, how do they do this? Come

14:29

on. Yeah, I

14:31

mean, do they need a plan if they have $10,000? You're preaching

14:33

while they need to know how they're going to invest it, don't

14:35

they? Well, okay, then the first

14:37

step for anybody then would be taking

14:39

something like the Risk Quiz. That's

14:42

a good idea. Do you know where you all can take the Risk Quiz?

14:44

Do you know where you can take it? You

14:47

just go to talkingrealmoney.com. I thought you were going to

14:49

say, do you know where you can put it? No,

14:51

you click on the Risk Quiz button. I'm sorry. Just

14:55

go to, yeah, that's very helpful because

14:58

it is a scientific approach. Trying

15:00

to ask telling questions. It's not

15:02

just, you could say, okay, so

15:04

how much risk can you stand? Oh, a lot.

15:07

No, no, no, no, no. So

15:09

what it does is it goes through some scenario

15:11

kinds of things and forces

15:14

you to really think about the

15:16

process, and then it calculates an

15:18

answer based on that. So it's not 100 percent,

15:20

it's not foolproof, but it's pretty darn good. I

15:23

mean, I've taken it several times. Pretty accurate. Go

15:26

take that. That'll tell you what risk you

15:28

can take. And then what you need to

15:30

figure out is, so when I

15:32

get to retirement, how much money am I

15:34

going to need to make? That's

15:36

going to tell you how much you need to save

15:39

and how much risk you need to take. 855-935. Tom

15:45

and Don are talking real money.

15:49

For your real life and real future, Tom and Don are

15:51

talking real money. Welcome back to

15:53

our little program. I'm Don. That's Tom. We're

15:55

here to help you deal with money. And

15:57

This summer, we're going to be talking real

16:00

money. we've been talking about a for a

16:02

while. I am taking the. The.

16:04

Newly restored airstream. Keeping my fingers

16:07

crossed that it'll make it all

16:09

without any problems as I am

16:11

taking it across the United States.

16:15

Over thirty days in

16:17

July. Going. East

16:19

to West and then taking it

16:22

back across the United States for

16:24

thirty days in September. Going.

16:27

West to Se. And.

16:29

What's what does the futures market on this

16:31

right now? I have a look at the

16:33

odds of whether know well make it all

16:36

the way here all the way back I'd

16:38

Here's what I'm hoping I heart and they're

16:40

all the work we did on the airstream

16:42

actually sticks It's and that if something happens

16:44

I could find somebody who can fix it

16:46

quickly. On the way. Because

16:48

we are. We're We're we're We're

16:50

going to take it slowly. I'm

16:52

doing about. Three. To four

16:55

hours driving a day because I still

16:57

have to work later in the day.

16:59

And here here is the beginning, the

17:01

roof and here on this is where

17:03

we need. your are I need your

17:05

help. Because I want

17:07

some of your ideas, We

17:09

have a tentative flowchart. On

17:12

the on the giant map that literally

17:14

took up the entire kitchen table it's

17:16

a six person table spread it out

17:18

but little study big enough put low

17:20

stick with things all over the has

17:22

been of. Big. Mail message you member

17:24

I voted for Eastern Europe, I voted for out

17:27

with his little going to be rather there's gonna

17:29

be the international road trip though. As

17:31

if this video it as a bit going

17:33

to be international are So here's the deal.

17:35

Yeah spob I already know or starting in

17:38

Asheville, North Carolina. That's.

17:40

Where the trailers going to be stored

17:42

because my mother's there in a nursing

17:44

home. So that's a good place to

17:46

start. We can stay in a Rb

17:48

place close by, get the trailer all

17:50

set up. Nashville and what's a real

17:52

departure? Their leave and klar Tentative date

17:54

of departures the fifth of July. two

17:58

thousand significant So what I'm

18:01

gonna do is give you a couple of two or three

18:03

locations where we're absolutely Going to

18:05

stop at the beginning in case

18:07

you guys might have an interest in seeing

18:09

us when we camp in those areas so

18:12

starts in Asheville then we go to East

18:17

of of Winston-Salem,

18:20

North Carolina to me Winston Salem and very

18:23

familiar with that. So sure Chapel Hill Then

18:25

we're gonna go up to beautiful Blacksburg,

18:27

Virginia home of the Virginia Tech

18:31

hokey hokey highs They

18:33

do the hokey hokey and they turn themselves around

18:35

because you know, that's what it's all about Then

18:39

we're gonna go up the Blue

18:41

Ridge Parkway through Shenandoah skyline. We're

18:44

gonna stay in Shenandoah National Park

18:47

Boone Docking it Means with

18:49

I don't know what that means without power Without

18:52

water without a sewer connection. We're

18:54

self-contained for three days Like

18:57

going to the dark side of the moon. It's a trip.

19:00

It's a trip then my

19:02

daughter and Son-in-law

19:06

and granddaughter live near

19:09

Lancaster, PA So

19:11

we're gonna go up and stay in a place there We

19:13

already have my daughters already picked out the RV park where

19:15

we're gonna stay close to her for a couple of days

19:17

So we're about the we're now to

19:20

about the 14th of July So

19:22

if you have any interest in those places Just

19:24

go to talking real money and send me a note

19:26

on the contact form Just send us a note on

19:28

the contact form. Can I go on there and

19:30

tell you where I'd like to send you? Well you hey,

19:33

you know where this ends up. I know You

19:35

know one of the convenient things about where it ends up

19:38

is on that drive that I

19:40

had built had you noticed It's right next to the

19:42

swamp. I mean with a couple pushes You're

19:45

right over the side. Yeah that never heard

19:47

from again at things a little heavier than

19:49

you can push I got my grandson's for

19:51

that. There's their their stout little guys Anyway,

19:54

and then the next stop from

19:57

there is somewhere in the Corning,

19:59

Elmira. New York area because it's

20:01

the right amount of distance. Little

20:04

be about the fifteenth or so

20:06

and that in that ballpark. Then

20:08

we go international for our friends

20:10

north of the border. And.

20:12

Hours because we're trying to cut across a

20:14

Michigan. so we're going to cut across and

20:16

gender probably stay in Hamilton. Around

20:19

Hamilton, Ontario. That

20:21

is north of the border and then

20:24

they'll continue over to. Middle.

20:26

Michigan somewhere we don't know exactly where

20:28

yes and then up to Traverse City

20:30

so those are that's the beginning of

20:33

our tour and of you have any

20:35

any places if you're a listener to

20:37

the podcast or you're just listen the

20:39

show online or you're interested in in.

20:42

Meeting. Up with a somewhere along the way. Send us

20:44

a note, tell us a cool place to go. Your.

20:47

Own where my travel plans for the summer day? You

20:49

going to Africa? No. One

20:51

can bizarre via Silver Bullet in the

20:54

no one can visit you their the

20:56

ultimate as the ultimate stopping point is

20:58

Seattle Washington. Are we going to have

21:00

anything for listeners and clients and people

21:02

come along the way know it was

21:04

in the Seattle or Oh for sure.

21:06

Really? Absolute zero Plan Something I have

21:09

no idea what for this will come

21:11

up with something. Pizza Eight Five Five

21:13

nine to reflect socks with the golf.

21:29

We're not in a real money I

21:31

I I checked with the mayor during

21:33

the break. The mayor of what. The.

21:36

Mayor Seattle know he to the city when you

21:38

arrived but they're working on an alternative and at

21:40

me or something to do with I would this

21:42

leave it at that for now, we'll see. But

21:44

anyway so no Keaton City but like I got

21:46

something special. you know him, the key to the

21:48

city. At. They won't open a

21:50

darn thing. The. just guys on

21:52

the wrong that big i tried it on

21:54

bank of america where i doesn't open anything

21:57

ups eight five five nine three five talk

21:59

we're talking about money life stuff, anything

22:02

really? Well, no money oriented, but almost

22:04

everything's money oriented, so we're good. Hey

22:07

Rob, you're up. Welcome to Talking Real Money.

22:11

Hello, thank you. That's my first time calling in. I love

22:13

your show. I had a real general

22:16

question for you guys. So

22:19

I'm 56, just turned 56,

22:22

about 2018-ish. I was, you know,

22:24

in my 401Ks I was directing

22:27

my own funds,

22:29

you know, usually target funds and all

22:31

that. And I did go with a

22:33

managed account starting in 2018 paying

22:36

a little under 1%. And I know yesterday's

22:39

gone, it's a new day, but I'm just curious

22:41

what you guys would say would

22:44

have been a fair rate of return for going

22:46

back from today, three years. And the reason

22:48

I ask is going

22:51

into the managed account, of course, I was asked

22:53

a lot of questions, okay, how much going you're

22:55

at home, which I do, how much equity, what's

22:58

your risk tolerance. And six-ish

23:01

years ago I said to my

23:03

broker, high risk tolerance,

23:06

if the market crashes, I know I'm gonna

23:08

wake up and I'm just gonna hold, try

23:11

to let it recover. High

23:14

risk tolerance, what

23:18

do you think that my average rate of

23:20

returns should have been for

23:22

the past few years in that type

23:24

of profile? Wow.

23:27

That's a great question. So okay, when

23:29

you say high risk tolerance, if you

23:32

look at your portfolio, could you tell

23:34

us your stock to bond ratio? Yeah,

23:37

yeah, yeah. I've been in 70, 30 for

23:40

the past years.

23:43

I did meet with them six months

23:45

ago on the phone and

23:47

they start changing it to going

23:49

up to 80-20 based on some of

23:51

my other assets. But

23:54

I wasn't in a 70-30 mix for

23:56

that three-year period. Now,

23:58

why you say three years? I thought this is since 2018. No,

24:03

no, I'm sorry. I switched over to the managed

24:05

account in 2018. But

24:08

I'm curious to know, so I've been with

24:10

them since 18. But

24:12

if I go into my account and I can look at

24:14

my performance on my funds and I can do a year-to-date,

24:17

three months, one year

24:19

return, three year, I'm curious to know what

24:23

you think. You see, this is a

24:25

question that is truly almost

24:29

impossible to answer because

24:32

it depends, is the correct

24:34

answer. It really depends on what kind of

24:36

a portfolio you would have built over

24:39

that time. All I can do is give

24:41

you benchmark things. For example, the

24:44

total world stock index over that

24:46

period of time returned roughly

24:48

from 2018 to 24. So

24:54

he said three years. Now you're saying six

24:56

years. I'm saying six. Over six years, it

24:58

returned about 30% in the 30%. In

25:02

total return. Total return, yeah. Because it went way up and

25:05

then it went way down in 2020, then

25:07

it went down again in 2022. I

25:09

think we lost him. Did we lose you, Rob? I

25:12

think I heard him bounce off. I mean, this is something

25:15

everybody wants to know, right? To get a lot of phone

25:17

calls, like, well, how do I know that I'm invested

25:20

properly? How do I know I'm getting a fair

25:22

rate of return? And they give you a date.

25:24

Like, how about since this date? And

25:27

it's difficult to help you do

25:30

that. Here's what I would look at conversely. Number

25:33

one, because he mentioned he was 70% in

25:35

stocks, 30% in bonds,

25:38

then 80-20, which I don't understand the reason

25:40

for the change. But then I'd be looking at out

25:42

of that 70, how diversified am I?

25:45

Because I'm betting you've got

25:47

more in large growth kind of, you don't

25:49

have enough in small. That would be part

25:51

one, right? Then I would be looking at,

25:54

am I getting treated fairly in terms of cost? Because

25:56

in addition to the, he said, almost 1%,

25:59

he's paying $1. to help manage the money, there's

26:02

the cost of the underlying investments that

26:04

people have a tendency to overlook. I'd

26:07

start with those two things first rather

26:10

than saying, did I

26:12

make as much money as I should have made? Because

26:16

it's very hard, without the specific

26:18

assets, that's hard to know if

26:21

that's true or not. It really is. Here's

26:23

the thing. We can kind of make some

26:25

comparisons. One, if you told

26:27

your advisor that you were at high

26:30

risk tolerance and you're young, 80

26:34

or 70, 30 sounds pretty conservative. I

26:36

mean, that's where I am. That's

26:39

where I am and I'm 10 years older. I

26:41

mean, relatively young. However, I'm

26:43

looking at a 70, 30

26:45

portfolio, total market, total market

26:47

from January 1, 2019

26:50

through the end of February 2024. We're

26:53

looking right around 30% for 70, 30 for that exact

26:55

period of time. So

26:59

that's a ballpark. Tom

27:03

and John are copying me all night.

27:06

Do you suffer from hodgepodgeitis? I'm

27:08

Don McDonald and hodgepodgeitis is a

27:11

disease of your investment portfolio whose

27:13

symptoms include lots of stocks, loads

27:15

of random loaded mutual funds and

27:17

maybe an annuity or two. Most

27:20

who suffer from hodgepodgeitis dread opening

27:22

their quarterly portfolio statements. They feel

27:25

lost and confused. Investing

27:27

seems overwhelming in the financial future uncertain.

27:29

If you believe you suffer from hodgepodgeitis,

27:31

see a 100% fiduciary

27:33

investment advisor immediately. A

27:35

proper diagnosis is the first step

27:38

to creating a portfolio with a purpose

27:40

based on a personal plan. Head

27:42

on the road to recovery now by

27:45

scheduling a free meeting with an APALA

27:47

advisor at talkingrealmoney.com. There

27:49

is no cost obligation or high pressure

27:51

sales pitch. Take the first step at

27:54

talkingrealmoney.com or call 800-386-3004. Hodgepodgeitis

27:59

is not a real disease. But treating it has been

28:01

shown to improve mood reduce fear and even lead

28:03

to a brighter financial future results may vary Your

28:07

guys to a really great financial future

28:14

Welcome back to our show it's An

28:17

easy program to be a part of all you have to

28:19

do is call us at eight five five nine three five

28:21

talk on A Saturday if you're

28:24

listening to this as a podcast just call

28:26

on Saturday Between noon

28:28

and 2 Pacific 3 and 5 Eastern and we got Rob

28:30

back and he has a follow-up question Rob

28:34

welcome back Yeah,

28:36

yeah, thanks guys. Sorry for the cell phone dip

28:38

Um, so yeah Thanks for answering the

28:41

question from what you think the decent return

28:43

should have been with a man's account from

28:45

18 to present Yeah,

28:48

and my main question was when I met

28:50

with my my broker. I'm the

28:52

one that said hey I'd like to go up a little

28:54

more risk. I'm at 7030 I'd like

28:56

you guys to push me to 8020 which

28:58

they just recently did But one

29:00

of my questions to him was when I

29:03

met with them in 18 I said high risk

29:05

tolerance I can sleep at night at the markets

29:07

bouncing and I said

29:09

Why wasn't I in 8020

29:11

and they sort of answered my question, but

29:13

you know again yesterday's gun. Yeah go back.

29:16

So And my original

29:19

question was what would be a

29:21

decent return in the managed account at my age?

29:28

So if we're just going 20 see 23

29:31

22 21 From January 21 to

29:34

February 24 Yeah,

29:38

the end of 2023 the toe annualized

29:41

at about 6% in a 7030 or A

29:46

total return of about 20% and

29:49

your previous statement is an interesting one

29:51

I mean this gets back to either

29:53

getting professional advice or getting sales advice

29:56

and we lost him again Because

29:59

if you go Just generally, if you go

30:01

see your broker insurance agent and you

30:03

say, hey, wait a minute, I'm missing

30:05

out on X, I

30:07

should be taking more risks because I told you guys

30:10

that, blah, blah, blah. Generally,

30:12

they will say, you're right, we can fix that.

30:14

You should be in this. If

30:17

you go see a full 100% fiduciary

30:20

advisor and say, if you come to me and say that,

30:22

I'm going to say ... You want to

30:24

be ... No, you have to be in what we told you.

30:26

We already have an agreement. Yeah. Yeah,

30:28

because we have an agreement. We have all those things

30:30

in place. That's why we're here because you're 55 years

30:32

old and you're trying to get to retirement. We agreed

30:34

this is how to do it. There's

30:37

a big difference there between an advisor and frankly,

30:39

a salesperson that you need to be aware of.

30:42

Absolutely. Now, just ... I don't know

30:44

if this will make you feel better or worse, but

30:47

had you been in an 80-20 ... The difference between a 70-30 and an

30:49

80-20 over that period is ... In

30:53

which period now? 18 or ... January

30:56

2021 through February 2024. Three

30:59

years. This is

31:02

a globally diversified equity

31:04

portfolio with intermediate bonds,

31:07

average intermediates. We're in the

31:09

ballpark. It would have been about just under 1%

31:11

more a year. A

31:14

year. I mean, in that

31:16

1% from your 50s on could make a ... And

31:19

that's not for ... That's not a ... That is not an

31:21

exact number. That

31:25

is a ballpark number. This is

31:27

just for comparison purposes only. And

31:30

again, the devil's in the blasted

31:33

details. What I would really want to

31:35

know before I could say, are they

31:37

doing a good job or not, is

31:39

to know what they have you in. Right. Because

31:42

it's all ... I'd like to know the breadth and depth of

31:44

the portfolio. Sure. Yeah. Yep.

31:48

The fees. The fees matter. There's so

31:50

many things that matter in this equation.

31:52

So I wish you well, Rob. Thanks for

31:54

the call. And AJ, you're

31:57

up next. Welcome to Talking Real

31:59

Money. Hi. Hi.

32:02

Yes, I talked with you guys

32:04

a couple of weeks ago and you really

32:06

gave me... I was 98... Not

32:09

98, the 90 year old

32:11

lady who wanted to... was going

32:13

to transfer all my stocks into mutual funds

32:15

to make it easier for my family

32:18

after I no longer hear. And

32:20

you talked me out... You told me that was not a

32:22

wise thing to do and I'm so grateful because I had

32:25

already done a little bit of it. And

32:27

it sure as heck should have raised my taxes

32:30

for this year. So anyway, but

32:32

what I want to know is what do

32:34

you... I'm new to this

32:36

area so I've only listened to you... This

32:38

is probably the third, fourth time. And

32:42

what do you usually recommend? Bonds

32:45

or bond funds? I have some bond

32:47

funds but I also have many, many,

32:49

many individual bonds and they're

32:51

just a pain. But

32:54

at the same time, I know... I

32:56

know that if I invest $20,000 or

32:59

$100,000 or whatever I'm investing, if

33:02

I hold it long enough, it'll... Usually,

33:05

I'll usually get my money back plus the

33:07

interest. Whereas the mutual fund, I

33:09

know it can fluctuate. So what do you... Being

33:12

as I said, I'm new to listening to

33:14

you. I don't know your philosophy. Well

33:16

then, here's the reason... We're going to share it.

33:18

We could go both sides. Yeah, I mean, first

33:20

of all, the reason I pay bond funds is

33:22

for what you just mentioned. They're easy. You

33:25

buy the right ones. You get them at extremely low cost. And

33:27

guess what? If you go out and

33:29

buy a bond and let's us from Treasury Direct, there's

33:31

a cost to that. If your broker sells it to

33:34

you, somebody else, they're getting it for nothing. No, you're

33:36

not. They got a way to figure out...

33:38

They slice it up so you don't get as much

33:40

of what you should get. I would

33:42

trust somebody like Vanguard instead who does that

33:44

with gazillions of issues

33:46

every year, buys all these bonds up

33:49

and gives you a... You

33:51

can buy bond funds with expense

33:53

ratios of almost zero now. So

33:56

I love that. In part two, let me just finish the thought

33:58

on what you said at the beginning in terms to

34:00

your family. I think it's wonderful you want to help your

34:02

family. I just came up in a recent conversation with a

34:04

client and they're trying to move a bunch

34:06

of money from pre-tax to post-tax and make it easier. I

34:09

asked the daughter who was sitting there, is it okay if

34:11

your dad gives you money and you have to pay tax

34:13

on it? She said, sure. Yeah, I mean, this is free

34:15

money. You want to give me free money and I got

34:17

to pay tax on it? I'm okay with that. So anyway,

34:19

I think you're doing the right thing. Don? As

34:22

far as the volatility, bonds

34:27

may bounce around. Bond

34:29

funds do bounce more, although bonds themselves

34:31

bounce. It's just that if you hold

34:33

them to maturity, you get the amount

34:35

that you put in, the face value

34:37

of the bond, if

34:39

you bought them brand new. But

34:42

they don't bounce very much.

34:44

The worst year in decades

34:48

was 2022. Yeah.

34:53

Otherwise, the volatility was

34:56

negligible to practically

34:58

non-existent for many

35:00

years prior and 2022 was

35:03

the culmination of a

35:05

freakish set of circumstances. Forty

35:07

years of freakish. Yeah. We

35:10

had rates dropping from 1980 through 2022. A

35:14

long time. Yep. I forget

35:17

that. And they dropped to almost nothing.

35:19

So the value of bonds had nowhere

35:21

to go but down. But

35:24

now, you

35:27

see, the thing about the fund is when

35:29

bond prices fell in 2022 a lot,

35:31

Vanguard was

35:34

going out and buying lots of new bonds

35:36

at those lower prices. Mm-hmm. And

35:40

guess what? When rates fall, when they do. Okay,

35:42

now what kind of a bond

35:44

fund do you recommend? We just

35:46

love. We love

35:49

the sheer simplicity and the massive

35:51

diversification and the incredibly low cost

35:53

of the Vanguard Total Bond Market

35:56

Fund or ETF. BND is the

35:58

symbol of the ETF. It

36:00

is the most diversified portfolio because

36:03

it owns all the bonds in

36:05

the total bond index. So

36:08

you will own, oh, let me

36:10

see. What's the expense ratio? It's

36:12

18,000 bonds. 18,000

36:14

bonds at 3 1 hundredths of 1%. It's

36:20

ridiculous. And AJ, the only reason you

36:22

would need a municipal bond fund, which

36:24

Vanguard has some very fine ones as

36:26

well, would be if you're at a

36:29

higher tax bracket. Otherwise, you'd think then

36:31

you'd just a total bond. And the

36:33

lovely thing about BND right now is

36:36

it's yielding 4.5%. The

36:38

SEC yield is 4.5% today. And

36:42

that's diversified. Well, let me tell you. I

36:45

think I have 10,000 of those 18,000 in my portfolio. We're

36:49

coming over later. You know, every time one, you know, comes

36:52

due, then you have to figure out what am I going

36:57

to do with it now. And it's been okay,

36:59

but I'm getting too old for this. Just

37:02

put it in BND. Every time they mature, put it

37:04

in BND. Thank you so much for

37:07

the call, AJ. 855-935-talk is our number. Give

37:09

us a call. We'll try and

37:12

help you muddle through this money mess

37:14

we all deal with. Tom

37:17

and John are talking real money.

37:21

For your real life and real future,

37:23

Tom and John are talking real money.

37:25

Only because it's really darn important. And

37:27

we know that it can

37:29

be a little frustrating and confusing. So call us

37:31

at 855-935-talk. 855-935-8255. Every

37:37

now and again, we talk about the

37:39

real estate industry and

37:43

the buying and selling of

37:45

homes. And there was a recent court case,

37:47

a big judgment against the National

37:50

Association of Realtors and a couple of

37:52

real estate companies. And now

37:54

the National Association of Realtors

37:56

has reached a settlement. the

38:00

courts that will

38:02

settle the commission fixing cases

38:05

supposedly against them should it

38:07

be accepted. And

38:09

I got to tell you, this is going to throw

38:12

the real estate business

38:14

into a bit of

38:16

turmoil. Well,

38:18

and I will add this. I mean, if

38:20

you read recent write-ups about this, there's many people

38:22

saying it's going to be the best real estate

38:24

market. It's going to be the biggest change since

38:26

the changes they instituted in the 1930s. And

38:29

I don't know if I agree with that because you're still facing very

38:32

low inventory and people that do own homes have

38:34

very low interest rates. So they really have no

38:36

interest in selling and buying something else. But

38:39

I do think it'll be better for people

38:41

that have hired someone as a buyer's broker,

38:43

right? In other words, it's gotten representation

38:45

because I want help when I go out and look.

38:49

And right now the seller generally pays all these. In

38:51

fact, I just went back and looked at the agreement

38:54

that I had the last time I did. And I

38:56

paid a lot last time I sold a

38:58

house to the

39:00

broker that was the buyer's broker. So I paid

39:02

both ends of the deal. Right. Usually

39:05

the way it works is there's a six, it

39:07

used to be seven. Now these days it's five to

39:09

6% commission that goes to

39:11

the selling agent. The selling

39:14

agent then puts in the

39:16

listing, we will give half

39:18

of that to the buying

39:20

agent, the buyer's agent. Now

39:23

those two transactions are going to be

39:25

bifurcated. They're going to get split. And

39:28

now if you hire a buyer's agent, you

39:30

will negotiate a commission with them to

39:33

handle the work for you and

39:35

the seller will get a

39:37

commission from the seller. Now I

39:39

don't know the details and the devil's always there,

39:42

but my thinking would be that the

39:44

seller's agents now will get no more

39:46

than 3%. If

39:49

selling agents are now getting six, they're

39:52

going to say, I'm going to take the whole six then for

39:54

me, then

39:56

it's not going to do anything to change the system

39:59

and it's going worse for buyers. I

40:01

don't know about how that's structured, but

40:03

if it's structured, how

40:06

it should be structured, and half of that six or

40:08

half of that five is what the selling agent's going

40:10

to get, and then you negotiate with your buyer's agent

40:12

for the two and a half or three percent, or

40:14

maybe you get two, or maybe you get one and

40:16

a half, or maybe you say, I'm going to give

40:19

you a flat amount of money, and

40:21

you represent me in the closing, and I'll

40:23

do all the legwork. And this

40:25

is the part that I really like, because Americans

40:27

pay about a hundred billion dollars in real estate

40:29

commissions a year. That's a lot. I

40:32

like the fact that this is now more out in

40:34

the open. All these things need transparency.

40:36

I mean, you need to know who you're

40:39

paying, how much you're paying, and why you're paying them. I

40:41

mean, that's what I love about this, and

40:43

I do think it'll make things cheaper

40:45

into the future, how much I think

40:47

is still under debate. But it's a

40:49

step in the right direction. It's a

40:51

lot. What we're seeing is the same

40:53

thing we saw with travel agents. I

40:57

mean, that industry changed dramatically. There are

40:59

still travel agents, but

41:01

we do most of the work ourselves.

41:03

And with Zillow's and Redfin's out there,

41:06

this is going to really change the

41:08

way we buy houses, because it is

41:10

going to take that real estate

41:13

agent collusion

41:16

out of the equation. And we

41:18

do in the United States have the

41:20

highest real estate commissions in the world.

41:22

Our real estate commissions are still where

41:25

things were in the old days. The

41:28

opinion and news expression of podcasts were current on

41:30

the date recorded. Opinions, estimates, forecasts, and statements of

41:32

financial market trends that are based on current market

41:34

conditions constitute our judgment and our subject change

41:36

without notice, including any forward-looking estimates or statements,

41:38

which are based on certain expectations and assumptions.

41:41

Although information and opinions given have been obtained

41:43

from or based on sources believed to be

41:45

reliable, no warranty or representation is made as

41:47

to their correctness, completeness, or accuracy.

41:49

Information presented on the podcast is not personalized

41:52

investment advice from a fellow well-off. The views and strategies

41:54

described may not be suitable for everyone.

41:57

This podcast is not edited by all the authors, director and director, other, and

41:59

other, and, of course, considerations which might be

42:01

material to you when entering any financial transactions.

42:03

Most performance does not guarantee fee joints and

42:05

profit as a result of the lobby game.

42:08

I hope you realize that the information provided on Talking

42:10

Real Money is for informational, educational, and hopefully enjoyable

42:12

purposes only. The podcast is not trying to get

42:14

you to buy or sell any financial products

42:16

or securities. Instead, the program is

42:18

provided as a public service by Apella Wealth,

42:21

a fee-only registered investment advisor. We

42:23

see Apella Wealth ADV Part 2A on

42:25

our website for information regarding Apella's fees

42:27

and services. Apella Capital LLC, DBA Apella

42:29

Wealth is an investment advisory firm registered

42:31

with the Securities and Exchange Commission. Not

42:34

all transactions are registered where it is

42:36

properly registered or it is a matter

42:38

of government registration requirements. Registration with the SEC

42:40

or any state securities authority does not imply a

42:42

certain level of skill or training. Apella does not

42:45

provide tax or legal advice and nothing either stated

42:47

or implied here should be inferred as providing such

42:49

advice. Thanks for listening

42:51

and please visit talkingrealmoney.com for more information

42:53

and important disclosure related to performance of

42:55

any specific index or firm quoted

42:57

in this podcast. Is anybody still

42:59

listening?